The Islamic Republic of Pakistan may have been one of the more resilient Asian countries in the wake of the global financial crisis, but since then the economy has been seriously weakened. The earthquake in 2005 did great damage to the country's infrastructure but the ruinous floods of 2010 have destroyed even more, with an estimated total economic impact of as much as US$43 billion.
The floods' aftermath has contributed further to public perception of inefficiency and to political unrest. The international community was slow to respond and the Pakistani government was blamed for sluggish and disorganized response to the floods. There were also allegations that local authorities and warlords conspired to divert funds. The wealthy, with better access to transportation and other facilities, suffered far less than the poor and the floods have exacerbated Pakistan's class divisions.
Overall, Pakistan has suffered for decades from internal policy disputes and low levels of foreign investment. Political and economic instability has caused the Pakistani rupee to be devalued and by 2010, inflation had risen to more than 13%. Recent lower oil prices and record remittances from workers abroad have helped stabilize foreign exchange reserves, but reconstruction of the country following the floods will severely strain Pakistan's limited resources.
High military spending absorbs a disproportionate percentage of the country's annual budget, justified by internal conflicts and Afghan Islamic extremism, tension with India over Kashmir, and nuclear rivalry with India. India and Pakistan exemplify the worst consequences of holding nuclear weapons. The great expense involved has a much greater impact on them than on richer nuclear weapon states, since both India and Pakistan have considerable poverty which would suggest the wiser allocation of resources for economic development.
Not all military spending comes from the country's own resources. The U.S. has provided direct and overt security aid to Pakistan since the September 11 attacks to a total of more than $20 billion. The U.S. has also trained Pakistani military forces and provided them with military equipment ,including tanks, missiles and helicopters. In spite of this, the government is set to announce a defense budget for 2011-2012 that will be just over a quarter of its expected tax revenues, though analysis suggests that the numbers understate the full costs of military spending.
Known military expenses have risen by 29 percent over the past two fiscal years, almost exactly in line with inflation, and after debt servicing, the government is left with only about 23.4 percent of actual tax revenues to run the rest of the government, invest in education and social services, restore infrastructure and ease the food crisis. The government will be heavily dependent on foreign aid over the next few years and it must come from other Muslim countries and the United Nations, as well as the US. This should help to prevent the widespread disaffection about US aid, its lack of success in buying goodwill and its disproportionate influence on Pakistani affairs.
So Pakistan needs new leadership to take the country out of this spiral down into further poverty and despair, which historically leads to anger and extremist violence. More spending on the military will not prevent violence; it will only make it worse.
A man who understands this well and is emerging as a powerful leader for a new Pakistan is Imran Khan, visionary, philanthropist and pious Muslim. Derided by his detractors for his colorful past as celebrity cricket player, Imran Khan has recently had another book published, which reveals a man of powerful insights and pragmatic solutions to Pakistan's internal problems. At the same time, he sees the need to restore Pakistan's international standing while tackling the immediate problems of over 15% unemployment. Pakistan's economy needs to be stabilized and made more immune to internal and external shocks. Job creation and poverty reduction are needed to get Pakistan out its current stagnation and Khan is very aware that young people in Pakistan, as all over the Middle East, are impatient for opportunity and change.
Imran Khan for president is a phrase that will be heard increasingly from now on, as corruption and political instability continue to erode confidence in the government. Reduction in business confidence, deterioration of economic growth, reduced public expenditures and poor delivery of public services are all undermining Pakistan's democracy. The domination of the military in politics and a disregard for the rule of law and order are destabilizing Pakistani society and encouraging the rise of militant Islamic political parties. If ever Pakistan needed a firm, wise, pragmatic and moral leader, it is now. The world will be watching Imran Khan's campaign for the Presidency with admiration for his courage and great hope for the future for the people of Pakistan.
Dr Azeem Ibrahim is a Fellow and Member of the Board of Directors at the Institute of Social Policy and Understanding and a former Research Scholar at the Kennedy School of Government at Harvard and World Fellow at Yale.
More writings here: www.azeemibrahim.com
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